Euronest Parliamentary Assembly Assemblée parlementaire Euronest Parlamentarische Versammlung Euronest Парламентская Aссамблея Евронест

COMMITTEE ON ENERGY SECURITY Minutes of the meeting of 2 April 2012

Baku

The meeting was opened at 11:30 and was co-Chaired by Mr Miloslav RANSDORF (EP) and Mr Fuad MURADOV ().

1. Adoption of the draft agenda

The draft agenda was adopted without change.

2. Approval of the minutes of the meeting of the Euronest Committee on Energy Security of 26 January, 2012 in Brussels

The minutes of the meeting of 26 January 2012 were approved.

3. Exchange of views with Mr Natig , Minister for Industry and Energy of the Republic of Azerbaijan.

Guest speakers: Mr Natig ALIYEV, Minister for Industry and Energy of the Republic of Azerbaijan, Mr Akim BADALOV, Director of the Azerbaijani State Agency on Alternative and Renewable Energy Sources, Mr Elshad NASIROV, Vice-President, State Oil Company of the Azerbaijan Republic (SOCAR)

The following spoke: Mr Jan BŘEZINA (EP), Ms Edit HERCZOG (EP), Mr Jan MULDER (EP), Mr Libor ROUČEK (EP), Mr Styopa SAFARYAN (Armenia), Mr Algirdas SAUDARGAS (EP)

Co-Chair Mr MURADOV invited Minister ALIYEV to express his opinion about the energy security in the region and to outline the trend of cooperation of Azerbaijan with the European Union.

Mr ALIYEV introduced his presentation by stating that energy issues were among the most important in the modern world development. He stressed that the reliable energy services were part of the global prosperity. Developing countries in particular need energy resources and supplies that are safe and reliable. They will give an opportunity to reduce the level of indigence and to improve the standards of living, to enhance industrial productivity and competitiveness on the global market that will lead to economic growth of such countries. The speaker explained PV/927605EN.doc 1 AP 101.242v01-00 that the population growing and current trends of global economy were an important driver in the need for energy resources. The lack of access to energy sources of millions of people worldwide is the major problem of the XXI century. Mr ALIYEV highlighted that the energy demand would grow in the near future, whereas stocks of the traditional sources of fuel are reduced. This situation gives great opportunities for development of alternative energy resources.

According to the speaker, efforts of the authorities of all countries are needed to ensure that renewable energy sources become competitive in the global market. The energy is a factor of stability and evolution of the world economy. The problems which are connected with energy security may be divided into several groups. The first block of questions is connected with geopolitical and geo-economic factors. The economic situation in certain countries of the EU (Greece, Portugal, Spain, Latvia, Romania and Hungary) has negative influence on global economy and brings unstable situation in the financial market. Political events in different regions of the world, especially in North Africa and the Middle East affect global oil production. The second group reflects the issues of changes to the global climate. The problems that arose after tragic natural events have negative impacts on public opinion regarding the use of nuclear energy and raise questions about its further development. It is necessary to reduce the level of oil consumption by increasing the growth of energy efficiency in the near future.

Mr ALIYEV also pointed out that for today, it was necessary to create new energy investment programs and achieve consensus between producers and consumers of energy resources based on fair circuit relations. The Minister underlined that the policy of high prices on oil would limit the economic growth of the world and lead to a further increase in prices for industrial goods. Moreover, he briefly described the energy policy of Azerbaijan. The realization of oil strategy for the management of gas, oil and energy resources makes Azerbaijan one among the providers securing energy supply in the region and the world. The main principles of the country's policy are: to meet national needs in energy resources, ensuring energy security of the country, increasing the role and significance of the country for the world economy and creation of a reliable corridor from the east to the west in order to ensure the transfer of energy to international markets. The development of energy infrastructure plays an important role in strengthening the position of Azerbaijan on the world energy market. Investments will increase for the development of new deposits of natural resources in Azerbaijan.

The Minister brought statistics data on production and export of energy resources from Azerbaijan. Collaboration in this direction will be accompanied by building energy infrastructures, such as the construction of a terminal for liquefied gas and its sale to the Black Sea basin countries. These achievements open new opportunities for cooperation and closer integration of national economies for countries of the region. The focuses of international attention are the issues which are connected with security and stability of supply of energy resources from the basin of the Caspian Sea. According to the Minister, the European Union is trying to create an effective mechanism for mutually beneficial cooperation on the basis of market economy, transparency of all agreements and freedom of competition. He remarked on the necessity to create a favourable regime with optimal prices and tariffs, which will be suitable for investors, producers, transit companies and consumers for achieving stability and energy security in the European community.

Mr SAFARYAN raised a question about the influence of the world economic crisis on oil and gas demand in the country and how it affected the economic development of Azerbaijan.

Mr ALIYEV explained that it was very important to make concrete steps for ensuring stable functioning of the energy industry in Azerbaijan. He assured that his state had not felt a significant influence of negative impacts of the global crisis, because financial resources from PV/927605EN.doc 2 AP 101.242v01-00 the export of oil and natural gas were adequate to realize state and social programs defined by the state institutions. There was no necessity to increase the oil and natural gas production today and in the near future for Azerbaijan. Changes in energy prices only had effect on cash flows that are measured annually. Mr ALIYEV explained that the dynamics of declines in investment in geological and research projects, environmental and scientific developments was dependent upon increasing energy prices on the world market.

Mr SAFARYAN asked about current developments in the extraction of renewable energy and green energy programs in Azerbaijan.

Mr BADALOV, in response to the questions, stressed that Azerbaijan had the power to produce renewable energy. This energy sphere will be developing in the future. The renewable energy sector is based on the state program, adopted on December 29, 2011, on the development of the renewable energy sources for the period up to 2020. The executive power of Azerbaijan is developing a strategy in this sector and is working on draft laws, which will regulate the relations of production for renewable energy, including taxation in this area. The program for developing the important areas in attracting internal and external investment will be created soon. The speaker stressed the need for new technologies and the establishment of special courses for training specialists in this field at national universities. Today is the beginning of the enforcement of green energy programs. The Kabustan city will cover all its energy needs through renewable energy in the near future. Mr BADALOV also stressed that Azerbaijan was a very rich country in terms of hydroelectricity potential noting that hydro-resources should go in priority to drinkable water supply.

Ms HERCZOG inquired about the opinion of the Minister about the development of strategic objectives of the Euronest Parliamentary Assembly in the field of energy and about questions the Committee on Energy Security should consider, in order to stimulate closer cooperation in the region.

Mr ALIYEV noted that all countries were faced with major issues which were relating to energy security and efficiency. According to the speaker, these priority issues required detailed consideration by the Committee. He highlighted that today new technologies for energy savings are needed. It is necessary to establish a program to control the rational use of energy within the framework of the Committee. Committee Members should also pay attention to the development of a green energy program.

Mr SAUDARGAS asked about the harmonization of legal frameworks among the countries located in the Caspian region. He inquired about the possibility of using these legal frameworks in relation to future cooperation.

Mr NASIROV pointed out that there were a number of provisions that currently regulated the Caspian Sea. He briefly outlined the historical aspects of the regulations applying to the legal regime of the Caspian Sea and gave examples of existing international legal acts that regulated these relations. He also briefly described the future direction of the regulatory framework that would facilitate a sustainable development of the energy industry in the whole region.

Mr ROUČEK commented about problems relating to the southern gas corridor and wondered about how this corridor would look like.

Mr BREZINA and Mr MULDER raised questions about the development of solar, wind and hydro-energy in Azerbaijan.

PV/927605EN.doc 3 AP 101.242v01-00 Mr NASIROV replied about the southern gas corridor stating that there were several aspects regarding this issue, primarily the production issue. He said that Azerbaijan had to invest US$ 22 billions to make gas available up to the year 2017. The second major issue was delivery. As Azerbaijan has to deliver 6 billions litres to Turkey and 10 billions litres to the EU. All this gas has to be delivered from to the Turkish-Georgian border. If production and delivery tasks will not be solved in time, then the whole project would not work.

4. Discussion and adoption of the Draft Report on "Energy security, renewable energy, energy efficiency, energy infrastructure: developments in the Eastern Partnership and in the EU countries"

The following spoke: Mr Rasim MUSABEYOV(Azerbaijan)

Mr MUSABAYOV noted that his draft report was distributed to everybody and proposed it to the Members for adoption.

The Members proceeded with voting on the amendments to the report and on the whole amended text. The report including approved amendments was adopted with 20 votes in favour and 1 against.

5. Exchange of views on the topic for the next Report of the Committee: "Energy security in connection with energy market and harmonisation between the Eastern European partners and the EU countries"

The following spoke: Mr Gerben-Jan GERBRANDY (EP), Ms Edit HERCZOG (EP)

Mr GERBRANDY, Co-Rapporteur of the next Report of the Committee, underlined the importance of the just adopted Report. He stressed the importance of particular issues addressed such as energy efficiency and renewable sources. He also mentioned the necessity of attracting investors and developing not only renewable, but also traditional energy resources.

Ms HERCZOG agreed with the above mentioned and stressed that innovation in the energy sector was a very important topic.

6. Planning and preparation of the Committee's activities for 2012-2013

Co-Chair Mr MURADOV informed that there would be no more meetings in 2012 because meetings can take place only twice per year. That is why the next two meetings of the Committee will be held in 2013. He proposed to hold discussions on mechanisms for developing new ideas on energy security. He also stressed that only 2 Committee's meetings per year were not enough and expressed the opinion that the Committee should meet more often.

7. Any other business None

The meeting was closed at 14:30.

PV/927605EN.doc 4 AP 101.242v01-00